Olympus' former chief executive Michael Woodford today dismissed as "desperate" reports that the board which ousted him is now considering tapping rival firms like Sony and Fujifilm to raise as much $1.3 billion (£832 million) in new capital.

The Nikkei business newspaper reported the plan to boost the company's depleted finances with new investors, possibly by issuing preference shares.

Olympus shares leaped on the news, although critics argued it could merely serve to dilute existing shareholders wanting to reinstate Woodford.

The 51-year-old Briton is creating a proposed board to put to a shareholder vote early next year.

Woodford told the Evening Standard he was encouraged by the Nikkei report.

"This just illustrates the desperation of the company and thus strengthens my case.

"While I agree the balance sheet should be strengthened, there are better ways than this," he said, adding that disposals, a rights issue or private equity investment should be considered.

Southeastern Asset Management, which owns 5% of Olympus shares, said it was worried attempts to bring in a new investor would dilute existing shareholders' voting rights. This could effectively sink a campaign for Woodford's reinstatement.